Small Business Idea Paper Introduction: Recently, the government released funds for persons willing for establishing a small business. This releasing funds’ concept will form many jobs, and the economy will be stimulated by it. For the owner of a small business, the first step is to determining which business form is best suited to his or her ideas. Furthermore, it is essential for the owner of business to evaluate implications of legalities and tax related to his or her business forms. The purpose of this paper is to define the advantages and disadvantages of the four different forms of business organization, including sole proprietorship, partnership, C corporation, and S corporation. The paper will define the different types of financial statements associated with each form of business organization. The paper will also define the consequences of Tax implications, Legal implications, and Accounting implications associated with each form of business organization. Furthermore, a business will be selected in the paper of which an explanation of the unique product or service will be provided. Sole Proprietorship: It is the easiest and general sort of business to establish. A number of assistances of this business include the decisions of firing and hiring workers, assessments of selecting the vendors, what equipment, and materials to buy and what directions he or she is willing the business to take. A drawback of this form of business includes the limitation of funds because the owner can only access the available funds. Furthermore, the sole owner is accountable for every obligation related to the business. Statement of cash flow is the financial statement that relates to sole proprietorship. Financial information concerning business cash payments and receipts in a particular time is provided by the statements of cash flows. It is significant for the reason that creditors would want to realize the cash amount that the business has. Statements of cash flows will define whether or not a credit limit for a loan will be established. Deductions, profit, and losses, and tax liabilities are stated in the owner’s federal income tax return because a sole owner is have the smallest amount of expenses. For that reason, the sole proprietor is responsible for all tax liabilities. Partnership “Partnership is a business organization in which two or more individuals manage and operate the business. Both owners are equally and personally liable for the debts from the business” (Investopedia, 2013). Business losses, profits, debts, and expenses are shared by the Partnership. Partnership is equally liable and responsible for every issue related to partners or of any of the partner. There must be one general partner in the partnership. A drawback of forming a partnership includes the retirement of a partner that can become the reason for issues amid the partners, and uncertainty as well as tension could take place amid the customers, lenders, vendors, and employees related to the business. For the business, there is no need of paying taxes by the partnership, in its place the losses and profits are stated to the central government and every partner is accountable for filling his individual federal tax return. Statement of retained earnings and income statements are the financial statements related to partnership. The organization’s profits and losses are reported in the income statement throughout a particular period. Profits and losses of the organization are demonstrated by the income statements, and it provides a recording of the organization’s operating expenses and revenues. The cash amounts and reasons of alterations in retained earnings for a particular time period are demonstrated in the statements of retained earnings (WileyPLUS, 2013). For partnerships, these financial statements are significant because they assess the organization’s dividend payments and show the owner’s equity. Furthermore, these reports can assist in bringing investors into the business and assist in setting up credit accounts, and establishing credit limits with dealers. C Corporation It is a “legal structure that businesses can choose to organize themselves under in order to limit their owners' legal and financial liabilities. C corporations are legally considered separate entities from their owners” (Investopedia, 2013). The organization’s shareholders have protection of limited liability and full freedom of choice over the profits that can be distributed or retained by them (IRS, 2013). A benefit of establishing this form of business is that the business is considered as a distinct entity and all taxes of the business are reported to the federal government, on the other hand, all shareholders report their individual tax return. For figuring the taxable income, a corporation normally takes the deductions similar to the sole proprietorship (IRS, 2013). Double taxation is a drawback of the C Corporation. The owners of business, in this business form, needs to pay business taxes as a distinct entity and individual taxes are filed by the shareholders. Additional drawback includes the extensive paperwork in the organization that has to be checked for mistakes. The business, for purposes of tax, is reflected as a distinct taxpaying entity and is not provided with the deductions of taxes when dividends are distributed among the shareholders. Statement of cash flows and income statements are the income statements used in C Corporations. S Corporation “S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income” (IRS.gov). S Corporations have particular rules that need to be encountered by the IRS. A drawback of S Corporation is that the organizations may not come across the guidelines and regulations of IRS. These are the organizations that select for passing corporate credit, deductions, losses, and income through their stockholders for purposes of federal taxes (IRS, 2013). Statements of retained earnings, cash flow statements, and income statements are relates to S Corporations. Cadenza Café The business I have selected is the sole proprietor. The name of the business is Cadenza Café. Cadenza will deliver tasty coffee produced from tasty coffee beans. This is not only an issue of health, but also a moral issue. Cadenza struggles for reliability. Cadenza will be constantly on the innovative techniques for protecting the surroundings, accompanied by the mankind health. Cadenza expects to be ultimately perfectly self-supporting in methods by making use of technology of hydrogen-fuel, and solar power and further techniques of renewable energy. By this, the healthier planet’s gap will be assisted in filling and will assist in creating a challenge for further companies to doing their parts too. Ultimately, Cadenza would also love to include an eating place accompanied by the café. I have selected this business as a sole proprietor because it is easy to create. In this business I have the complete decision-making power and control over the process of the business. Another reason for selecting sole proprietor is that there are no corporate tax payments.

Conclusion: Much dedication, hard work, and sacrifice is required for establishing a business. For the owner of a small business, the first step is to determining which business form is best suited to his or her ideas. The paper thoroughly has defined the four business forms and has provided such data that will assist a fresh owner for making the accurate decisions while establishing a business. References: Internal Revenue Services. (2012). Internal revenue services. Retrieved from irs.gov/businesses/small/article0,,id=98263,00.hthl Wiley PLUS. (2000-2012). Introduction to finanical statements. Retrieved from Wiley PLUS, ACC561 website. Definition of partnership, retrieved from http://www.investopedia.com/terms/p/partnership.asp Definition of C Corporation, retrieved from http://www.investopedia.com/terms/c/c-corporation.asp Definition of S Corporation, retrieved from http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/S-Corporations